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FinanceWindow for Lukoil sale of Bulgaria's Burgas refinery closes without deal
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A US license allowing negotiations for the sale of Lukoil's international assets, including the Burgas refinery in Bulgaria, expires on Saturday without a deal. The license, General License 131G, permits talks but any sale requires separate US approval. Bulgaria faces a difficult position as Washington pressures Lukoil while Sofia seeks exemptions to protect domestic fuel supplies. The Bulgarian Constitutional Court struck down provisions allowing the refinery's administrator to sell without judicial review, complicating the process. Meanwhile, EU sanctions against Russia were approved but Lukoil founder Vagit Alekperov was removed from the list at Bulgaria's request. Crude supplies remain uncertain after earlier warnings that stocks would last only until end of July, though purchases have resumed. The US could extend the license, as it has done seven times since November.
Source report
SOFIA – A US license permitting negotiations over the sale of Lukoil's international assets expires on Saturday, but Bulgaria's petrol stations and the Balkans' largest refinery are not expected to cease operations.
US sanctions are pushing the Russian oil group to divest its international assets, including the Burgas refinery, though no sale has yet been agreed.
License Details
Saturday's deadline applies to General License 131G, issued by the US Treasury's Office of Foreign Assets Control (OFAC). It authorises negotiations over the sale of Lukoil International, the Vienna-based holding company that owns:
- Refineries in Burgas (Bulgaria) and Ploiești (Romania)
- A stake in an Iraqi oilfield
The license covers talks, due diligence, and contingent contracts. Any completed sale would require separate approval from Washington, subject to three conditions:
- Lukoil must fully relinquish control
- Proceeds must be placed in a blocked account under US jurisdiction
- The company must receive no windfall
Bidding and Valuation
US investment fund Carlyle has been considered the leading bidder since January for a portfolio analysts value at approximately $22 billion. Lukoil has already written down the value of the assets by $19.8 billion, contributing to its first annual loss.
If Washington does not extend the license, negotiations will lose their blanket legal cover. Any subsequent step would then require specific OFAC authorisation.
Two Separate Deadlines
Lukoil's Bulgarian companies operate under a separate license – General License 130A – which remains valid until 29 October and names all four covered companies.
This means Saturday's deadline will not halt refinery operations or fuel sales. However, two developments this week have complicated the situation.
Constitutional Court Ruling
On Tuesday, Bulgaria's Constitutional Court unanimously struck down provisions allowing the refinery's special administrator to sell the business without judicial review. The legislation had passed through parliament's energy committee in just 26 seconds and was later vetoed by then-president Rumen Radev, before lawmakers overrode his objections.
The ruling limits the administrator's powers and restores the possibility of legal challenges to any sale.
EU Sanctions Package
On Thursday, EU ambassadors approved the bloc's 21st sanctions package against Russia. At Sofia's request, Lukoil founder Vagit Alekperov was removed from the final list, along with Russian Orthodox Church leader Patriarch Kirill.
The contrasting moves underline Bulgaria's difficult position: Washington is tightening pressure on Lukoil, while Sofia seeks exemptions intended to protect domestic energy supplies.
Possible Extension
OFAC could still extend the negotiation license before it expires. Washington has done so seven times since November, generally granting extensions of around one month.
Crude Supply Uncertainty
The remaining uncertainty concerns crude supplies. In early June, Lukoil Bulgaria's government-appointed special administrator, Evgeni Simeonov, said existing stocks would last "until the end of July". Supplies have since resumed, with the refinery again purchasing crude through Swiss-registered traders from 1 July. No updated estimate of available stocks has been published.
(rh)
Source
EuractivWestern
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Lukoil Sale Window Closes Without Deal for Balkans' Largest Refinery